15 August 2015

The Odd Case Of The Vigilant Tourists

A Texas couple sold thousands of tons of alfalfa for more than $1.5 million to Colorado farmers, bought a big boat and sailed away to the Bahamas with their seven children. The seemingly idyllic family adventure didn't end well, however, because Donald and Karlien Winberg didn't actually grow alfalfa. They're con artists.

After federal fraud charges were filed in April 2014, the Winbergs went on the run for several months. FBI agents tracked them to a 40-foot sailboat near the Staniel Cay Yacht Club in the Bahamas in October. . . . A federal grand jury in Denver indicted the Winbergs on April 22, 2014. After going on the run, the family surfaced in the Houston area in October and bought a sailboat with $20,000 cash using fake names, the Houston Chronicle reported. They lived aboard the boat at a local marina until shortly before setting out Oct. 29. Galveston Bay authorities rescued the family from the sinking boat.

Shortly afterwards, the Winbergs bought a larger boat and sailed to the Bahama islands, court records say. Tourists from Louisiana on vacation in the Bahamas recognized the fugitives and called the FBI.

I've litigated many cases against con artists big and small, and have had to turn as many down because it wasn't possible to identify and locate the perpetrators who were operating under false names and claimed to be working out of non-existent office addresses.

It is rare for law enforcement to be willing to step in and take action. But, the fairly large dollar amounts involved, the multiple victims, and the fact that the case had strong ties to Colorado, Texas and Idaho at the time that it was filed, and the fact that the perpetrators apparently didn't use false names.

Far more remarkable, however, is the fact that even though "Galveston Bay authorities" who rescued the family of con artists from their sinking sailboat didn't recognize them and turn them in, tourists from Louisiana on vacation in the Bahamas did!

Seriously, how many are so alert that, even when they are on a beach vacation in the Bahamas, they were aware of the existence of someone who conned some farmers out of money in states where they don't even live, and then connected the dots to know it was them in the Bahamas? Even determined private investigators are rarely able to find fugitives in cases like these. But, perhaps because a family of fraudsters with seven kids on a sail boat in the Gulf of Mexico are so different from the run of the mill "most wanted" poster criminals, they may have been more memorable.

This case wasn't national news (rightfully so, it isn't that big), but presumably, the FBI or federal marshals must have figured out in October that they had just missed their quarry in Galveston and that they had fled via another sailboat, and then put out the word in marinas, in local news broadcasts across the Gulf Coast, and maybe even in Caribbean news outlets, shortly afterwards. People who frequent marinas may be more attentive to wanted criminals who could crop up in the boat next to them than to run of the mill thugs reported on the nightly news, for example.

Still, even then, the tourists rate as incredibly vigilant. There seems to be an endless barrage of missing persons and most wanted criminals in post offices, grocery stores and news stories (most for serious violent crimes), that it is very hard to keep track of. And, it is also rare for someone to have the certainty that these people are the suspects, the sense of civic duty to take action on that knowledge while on vacation, and the familiarity with the criminal justice system to know how to report this knowledge to someone capable of securing international cooperation to have them arrested in a foreign country. Many a small town cop in the jurisdictions where the farmers who were victimized by these crimes lived would not have known how to manage such a bureaucratic feat.

Indeed, the mores I think this through, the more likely I think it is that these tourists may have been vacationing law enforcement officials of some type who were alerted to these fugitives through official channels and been able to take action on that information because of their professional expertise.

I guess I'll never know how this extraordinary tip was really made possible, but it would be fascinating to know. Still, whatever the circumstances, it does illustrate a recurring theme. Sharing information about suspected wrongdoers with the public routinely results in them being apprehended or thwarted, while keeping this information secret makes it much easier for suspects to remain at large. Secrecy rarely makes us more secure, and this is just as true in cases where the suspects are suspected terrorists or national security threats as it is when they are mere common con artists as in this case.

Once arrested, the couple eventually pleaded guilty to federal wire fraud and conspiracy charges. Yesterday, about ten months after they were arrested, they were sentenced in federal court in Denver, although the report that I link to doesn't say what sentences were imposed. Given the amount stolen, both parents will likely face many years in prison, leaving their seven kids in the lurch, either to be placed with extended family, or in foster care, something that they presumably did nothing to deserve. But, it is hard to see any way to avoid that outcome while appropriately punishing the parents.

The short news report also doesn't make clear how much of the stolen funds were recovered or repaid in a restitution award from other sources, or whether the victims of the fraud were able to recoup any of their theft losses from insurance. While homeowner's and business insurance policies routinely cover stolen tangible personal property, it is much less common to be able to recover money paid as a result of someone else's fraudulent conduct with an insurance claim.

One of the unfortunate realities you face as an attorney trying to secure justice for a client who has been defrauded is that your client is usually better off with the fraudster out of prison where he or she can earn funds to make settlement payments, even though this exposes the public to the risk that the perpetrators will merely find new marks (and perhaps even use the funds secured from those victims to pay your client). Likewise, as a private attorney helping one fraud victim, it is often in your interest to act in a way that doesn't tip off other victims (and fraudsters almost always have more than one victim) that you have located the fraudster and brought him or her to justice, because then the limited funds available to compensate your client (which are almost never sufficient to secure a full recovery) will have to be shared with other victims.

Similar moral conflicts arise when your client is the victim of some systemic business conduct or administrative behavior of a government agency. Attorneys defending the business or government will often offer your client a settlement in exchange for confidentiality and an end to your lawsuit or threatened lawsuit, even though, had you prevailed on the merits (as you are likely to have done in cases that the other side is willing to settle), your win would have given other victims a binding precedent that they could have used to win easy victories of their own, and would have made the perpetrator much more likely to discontinue what is typically an ongoing pattern of improper conduct. Unless your client is independently wealthy and has an extreme sense of moral duty, your client will usually direct you to take an offer that provides compensation to them, even if that means allowing the repeat perpetrator to escape justice for harms to other past and future victims.

One of the important reasons that businesses so vehemently oppose class action lawsuits is that it denies them the ability to grease the squeaky wheels, while unjustly screwing over everyone else that they have wronged without facing any consequences for their actions.

As an attorney representing a private client who has been victimized by fraud, your duty to put your client first, even if other victims will be left worse off, is clear. But, this is certainly one of the otherwise more morally ambiguous imperatives imposed upon attorneys as a matter of professional ethics.

In private litigation, restitution almost always trumps retribution or justice viewed at the level of the entire course of conduct by the wrongdoer. But, while this is almost always the right micro-level decision for the victims who you represent, it is not at all clear this the incentives our legal system creates to take this approach make sense as a matter of public policy. If would be perpetrators of white collar crimes knew that a complaint from even a single victim would be highly likely to lead to legal action that would lead to them being punished for the entirely scheme, this might be a more powerful deterrent to committing the crime in the first place.

But, the current regime, in which law enforcement routinely treats fraud and other forms of white collar crime as a civil matter that they aren't willing to devote the resources to pursuing, where private litigation is often not cost effective because expensive investigation is necessary to unravel the facts needed to sue, and where perpetrators who are brought to task in private litigation routinely escape full punishment for their wrongdoing by confidentially settling with the few victims who sue in exchange for dropping the matter, almost inevitably fosters a certain level of corruption and disregard for the rule of law in the business community.